from the ground Up

by Jessica Cheam [the original version]

I RECENTLY came to a conclusion that ‘growth’ is overrated.
Or at least, the conventional definitions of economic growth are no longer relevant today.
To quote well-known Canadian environmental activist David Suzuki, I think it’s time we redefined what economics is, and put the ‘eco’ back into it.
After all, both concepts are derived from the same root word “oikos” (eco) which literally means house, referring to the environment we live in.
Ecology, as an extension, is the study of the house, or environment. While economics, is a combination of “oikos” and “nomos” (rules, management), meaning house management.
Somewhere along the way, however, I think we forgot about the ‘eco’ in economics.
What triggered these thoughts was the recent public exercise to gather ideas for a blueprint on Singapore’s green journey for the next 10 years.
Since its debut on July 28, the ‘Sustainable Singapore’ website has received 700 suggestions and counting on issues ranging from solar energy and cycling, to the country’s energy efficiency.
I noted with interest the quick assurances issued by the government that Singapore’s green steps will be taken “in a manner that will not upset economic development.” Finance Minister Tharman Shanmugaratnam added: “What will not be compromised is economic growth.”
These are statements often heard in debates on greening economies, even on the international stage at United Nations (UN) meetings or at regional economic summits.
On one hand, I fully understand why governments place utmost importance on economic growth, as it leads to increased wealth, job security, etc – perceived elements of a stable and happy country.
As Prime Minister Lee Hsien Loong pointed out in his rally speech, growth gives us the resources to solve problems.
Singapore, for example, has used its wealth to take steps in greening its economy, making investments into environment-related research and development.
But on the other hand, economic growth is sometimes used too easily by many countries as a cop-out not to take drastic actions that are urgently required.
When in town earlier this year, the UN Environment Programme’s executive director Achim Steiner said to me: “You can never expect a politician to say you’re going to lose your job, or I’m going to make your life more miserable, for the sake of the environment.”
But the sad fact is, he added, “many of those in charge of economies today permanently exxagerate the cost of moving towards greater sustainability and totally under-represent the returns of investment of such actions.”
“This has led many countries to defer decisions about the future for far too long and the result is it gets much more expensive,” he said.
The one common questions governments today grapple with: How to we balance the costs and benefits in greening any economy? How much gross domestic product (GDP) do we sacrifice?
To answer this, we need to first question and redefine this endless pursuit of economic growth.
Growth is only possible because we draw on earth’s natural resources and have built economies around it. The bigger consideration is whether our insatiable thirst for growth will tip the earth past a point where it can no longer support our global activities.
The problem with conventional economics is that nature, or environment costs, are treated as externalities and unaccounted for.
Take China’s growth story as an example. A recent Financial Times report highlighted the environment as the “devastating price” it paid for its rampant growth.
While millions of its citizens were lifted out of poverty, its growth model “left large swathes of the country devastated and unable to support even basic ecologies”, it wrote.
It’s an example of how GDP growth is a “narrow, artificial indicator” that captures economic activity but does not account for real costs, said Mr Steiner.
The effect is the burden of growth has fallen disproportionately on the poor, who struggle with water scarcity, food shortage, water and air pollution.
So what is China’s real growth? Some may ask. Some reports have put China’s economic losses from environmental degradation at some five to 10 per cent of gross GDP. A real indication would have been if China’s GDP growth calculated this environmental costs, said Mr Steiner.
The good news is, more economists are starting to realize this.
And in the near future, countries might have to change how they calculate growth. Mr Steiner reveals that the UN is working with leading universities and the World Bank to create a new wealth indicator for countries to account for the drawing down of “natural capital” – and the return of investment on conserving the environment.
As we in Singapore start to plan our sustainable development policies this year, we should keep in mind the changing definitions of wealth and growth.
While we try to perfect the art of “balancing costs and benefits” – we should ask what we are defining as the reasonable cost of greening.
Are we willing to take the necessary steps, or will our ‘greenspeak’ become just lip service?
And don’t get me wrong, I’m not saying we should stop growing.
On the contrary, climate change has presented tremendous growth oportunities for us in the clean energy, water and environmental sectors etc.
All I’m saying we can grow in a much greener way, which might cost more in the short-term but offer much longer- term return of investments.
And we must dare to do it.
Some suggestions offered by industry players range from giving subsidies to clean technology, to giving green tax rebates. The government has said it does not favour subsidies as it believes this will distort the market. But having a green tax structure seems like a viable option. As it is, hybrid and CNG cars already get rebates, and there are tax concessions on income from carbon trading.
Nominated MP Edwin Khew, who is chief executive of waste recycling firm IUT Global and chairman of the Sustainable Energy Association of Singapore, feels more can be done – such as introducing tax incentives for efficient and pollution-reducing equipment for businesses.
Others such as Singapore Environment Council executive director Howard Shaw thinks electricity prices, for example, can be made more expensive at higher consumption volumes. Perhaps even citizens can be given tax incentives for adopting big ticket, energy-saving items.
Some countries such as Sweden and Norway are ahead of the curve, adopting bold environmental policies that others have avoided (like a direct carbon tax on emissions) and have proved that it works.
One country Singapore could take a leaf from: Switzerland. There, residents have to pay for how much rubbish they throw. Here, we pay for someone to take our rubbish away, for the waste to be landfilled or incinerated. But we don’t pay for the damage or costs to the environment our rubbish causes.
If, like Switzerland, we factored the cost of our rubbish into daily life, our actions will be a lot more different.
People will start factoring the cost of their waste and recycing will become a natural progression.
Such are ideas we can suggest and lobby for, from our policy-makers, in this nationwide call for ideas to make Singapore greener.
Put the ‘eco’ back into economics, and chances are, we’ll get it right.

also published in The Straits Times, 28 August 2008